Premier Foods promises to simplify its ‘Invest for Growth’ programme

British food manufacturer Premier Foods has said it will simplify the details of its ‘Invest for Growth’ programme, following reports that it requested large funds from suppliers to continue contracts.

The move came just 48 hours after the business secretary Vince Cable asked the Competition and Markets Authority (CMA) to investigate the ‘pay-to-stay’ arrangements allegedly being used by Premier.

According to a report by The Guardian, an investigation by BBC Newsnight revealed that Premier Foods asked for payments of an estimated millions of pounds from suppliers across the UK.

In a statement, the company said that after having reviewed the comments about its programme, it will simplify the details of its future programme to a more conventional type of discount negotiation potentially based on price, value or volume based rebates, or lump sums. It said its programme had been misunderstood and misinterpreted.

Premier Foods CEO Gavin Darby said: "Our ‘invest for growth’ programme has worked well for us over the last 18 months in allowing us to consolidate our supplier base and invest in innovation, marketing and promotions to support our brands. Many of our suppliers have chosen to invest with us and have grown their business as a result, despite the challenging market environment.

"Most companies look for value from their suppliers and will commonly negotiate discounts or lump sums wherever they can, which will be offered and accepted by suppliers if they believe their business will benefit. This is standard business practice. The investment payments we have requested from our suppliers are effectively just one form of discount of which there are many different types."

The company said that the programme had been launched in July 2013 to reduce complexity in support of its plans to help in the turnaround.

Premier’s product portfolio includes Mr Kipling cakes and Ambrosia custard.

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Image: Premier’s product portfolio includes Mr Kipling cakes and Ambrosia custard. Photo: courtesy of Premier Foods.